Dairy farmer Natasha Yarrington, with her youngest daughter Layla, has been informed she has to pay back the Farm Household Allowance for 2015/16.

Dairy farmers are battling drought and unsustainable milk prices, yet some are now also being forced to repay the government’s Farm Household Allowance (FHA).

Mother of four Natasha Yarrington, who milks 130 cows with her husband Rod on their sixth generation family farm on the Mid North Coast, received a letter in July from Human Services informing her they had to pay back the entire allowance of $12,000 from the 2015/16 financial year.

The allowance accounted for a third of her husband’s taxable income for that year.

“That money put food on our table, it was designed so you can still live a normal life, so how can they turn around two years later and say ‘by the way we want that back’,” Mrs Yarrington said.

She said the FHA is the payment equivalent to the unemployment benefit to help struggling producers pay for food and household bills​.

“So I asked the question, ‘does that mean if someone gets a job after being on unemployment benefit they will have to pay back?’. They told me no. So why do we have to pay it back when the FHA is mirrored on the same benefit,” she said.

“We don’t want a $12,000 debt and we don’t want handouts, what we want is a fair price for our milk so we wouldn't have to apply for this.

“We are a living below the minimum wage working seven days a week.”

The Yarringtons are not alone. It’s the same story for another dairy farmer The Land spoke to, who did not want to be named, who also received a letter in July to pay back $4967.16 of FHA for the same financial year.

That year their taxable income was $14,267. Initially this family was given three weeks to pay the allowance back in full, but then were forced on a payment plan, which started immediately.

“We are being asked to pay back at a minimum rate of $100 a fortnight during arguably the worst drought in NSW and when we are receiving unsustainable low milk prices,” the farmer said.

“We are expected to declare what our income will be at the beginning of the financial year, but it is impossible to know what we will be given due to the unpredictable nature of farming from weather to commodity prices.”

The farmer said when they applied for the support they were advised not to self assess their financial situation and declared all off-farm income on which they were assessed as eligible through meetings with Centrelink.

They then had to make fortnightly reports about their finance and were still deemed eligible for FHA.

“Does this mean in 12 months time when farmers assess their financial positions that they too may be subject paying the FHA back,” the farmer said.

Both farmers spoke to federal Agriculture Minister David Littleproud at a dairy industry meeting at Wauchope recently who urged them to contact his office.

Mr Littleproud told The Land yesterday the FHA review was looking at the issue and that “no-one should self assess”.

A Department of Agriculture spokesperson said as of October 26, almost 3700 people across Australia were receiving the FHA, including Interim FHA (open for applications between March and June 2014), with more than $230 million being paid.

The spokesperson said FHA recipients needed to provide an estimate of farm business income they expected to receive at the beginning of each financial year. This estimate could be updated at any time if it changed.

“At the end of the following financial year...if they were not paid enough, they receive a top up payment. If they were paid too much, they may be asked to repay some money. This is called Business Income Reconciliation (BIR),” the spokesperson said.

“Only the profit portion of income from businesses (including the farm and/or any other business) is taken into account. For example, a person might receive $40,000 from the sale of livestock when they are reducing stocking levels on their property.

“However, they are able to deduct the running costs that went into producing the income such as feed, water, vet bills, drenching, shearing contractors, fuel, sales commissions, so it is possible that there is either nothing, or very little to declare. Business income is apportioned over the following 12 months.”